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U.S.Housing Costs Continue to Soar, Pricing Out Millions as Key Factors Converge
Washington D.C. – A confluence of factors is driving a sustained surge in U.S. housing prices, leaving a growing number of Americans struggling to afford both homeownership and rental costs. From restrictive zoning to increased investor activity, the market faces a complex web of challenges that show no immediate signs of abating.
Several key elements are contributing to the affordability crisis. Restrictive zoning policies limit the supply of new housing, while concurrently, demand remains high. The cost of construction has also risen dramatically, with building expenses now accounting for 64.4% of a new home’s price in 2024 – up from 60.8% just two years prior, marking the highest share ever recorded by the National Association of Home Builders.
The cost of building a new home currently ranges from $137,901 to $523,890, in addition to land costs which can range from $3,000 to $150,000, according to Zillow. This increase is largely fueled by higher inflation impacting the price of building materials.
Beyond supply and construction costs, investor activity is significantly impacting the market. Large investors and corporate landlords are increasingly purchasing single-family homes, apartment buildings, and mobile home parks, driving up prices and rents. These properties are often converted into short-term rentals or held vacant as investment assets, further diminishing the available housing stock for local residents.This speculative activity reduces housing options for both renters and buyers, particularly in communities already facing housing shortages.The Institute for Policy Studies notes that as investors prioritize profits, the needs of local neighborhoods and communities are frequently enough overlooked.
Ultimately, a combination of restrictive zoning, limited housing supply, high demand, rising construction costs, and increasing institutional investment is creating a challenging landscape for those seeking affordable housing in the U.S. As prices continue to climb, many Americans will face ongoing difficulties in securing suitable housing.
